The fixing of maximum prices by government is mainly on

1. Analyze the question The question asks which goods the government usually places a maximum price (a price ceiling) on.

2. Explain the concept A maximum price, or price ceiling, is a legal limit set below the market equilibrium price. It stops sellers from charging more than that price. Governments use it to protect consumers, especially low-income earners, from high prices on goods that people need to survive or live decently.

3. Work through the options

• A. Imported capital goods: These are machines and equipment used by firms. Governments may tax or restrict them, but they do not usually put price ceilings on them.
• B. Inferior goods: These goods are already cheap, and demand for them rises when incomes fall. They do not need price protection.
• C. Selected essential goods: Examples are petroleum products, rice, bread, sugar, and drugs. Price ceilings are mostly used here because prices that are too high would hurt ordinary citizens. The word "selected" fits because governments control only some essentials, not every product.
• D. Luxury goods: These are bought by wealthy people. Governments are more likely to tax them than to cap their prices.

4. Answer The correct option is C. selected essential goods.

5. Tip Link these terms in your mind:

• Maximum price → protects consumers → used on essential goods.
• Minimum price → protects producers → used on agricultural products, and also on wages (the minimum wage).

Watch out for the possible side effects of price ceilings: shortages, black markets, and rationing.